Spelling trouble for India at the on-going negotiations for the Regional Comprehensive Economic Partnership pact, China has demanded that New Delhi eliminate duties on almost all categories of items, including sensitive ones such as steel, electronics and chemicals, despite the initial decision taken by the two countries to keep ambitions low.

In its first round of requests made to India, China’s demands have gone much beyond the understanding reached between the two countries on eliminating tariffs on 42.5 per cent of trade items.

“We have already held bilateral discussions with China on the sidelines of the last RCEP meeting in Australia asking it to be realistic and bring down its demand. But we have not yet received a positive response,” an official said.

New Delhi is worried about China’s aggressive stance as the Indian industry is neither equipped nor willing to face uninhibited competition from its neighbour.

“What has made matters worse for India at the RCEP is the fact that most members want tariffs on goods (the agreed number of items) to be reduced to zero within a ten-year time-frame, in line with the ambitious Trans Pacific Partnership agreement between the 12 Pacific Rim countries led by the US,” the official said.

The RCEP has prescribed a deadline of June 1 for all members to give their first round of requests to other members, based on the initial offers made by each, as efforts are on to wrap up the pact this year. “While there are a number of items including agriculture products, pharmaceuticals, auto components, marine products and metals where our industry has aggressive interests in China, we are apprehensive about asking for too much as it may lead to China justifying its own high demands placed before us,” the official added. In the first round of offers, India agreed to eliminate tariffs on 42.5 per cent of items for China, Australia and New Zealand, 65 per cent for Japan and South Korea and 80 per cent for the ASEAN. It is important for India to be a part of the proposed pact to counter bigger blocs like the TPP and also retain its competitiveness in the region.

At the next round of RCEP in New Zealand next month, India will try to negotiate for a longer implementation time-frame for goods as well as reiterate its demand for a good deal in services, especially related to free movement of workers.

Trade bloc The RCEP, being negotiated between 16 countries, including the 10-member ASEAN bloc, seeks to create one of the largest free trade blocs in the world, as the countries together account for 45 per cent of the world population and over $21 trillion of gross domestic product.

India’s trade deficit with China has already crossed $52 billion in 2015-16 with its imports increasing 2 per cent to $61.7 billion and exports decreasing 24 per cent to $9 billion. The deficit is rising despite imposition of anti-dumping duties by India on a variety of Chinese products ranging from iron and steel items to telecom equipment.

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